Economic Report: Chicago PMI weakens further in October

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A worker installs parts in a Mercedes-Benz C-Class frame as they move down the production line at the Mercedes-Benz US International factory.

The numbers: A measure of factory activity in the Midwest weakened further in October.

The Chicago Purchasing Management Index sank to 43.2 in October from 47.1 in the prior month. This is the lowest level since December 2015. Economists has expected a reading of 48.3, according to Econoday.

Any reading below 50 indicates deteriorating conditions.

What happened: New orders declined to 37, the lowest level since March 2009. Order backlogs saw the largest monthly decline.

Big picture: The Chicago PMI can be more volatile than the national ISM index, which will be released Friday. Manufacturing is facing the brunt of a global trade slowdown and the Midwest is being particularly hammered.

Market reaction: Stocks were lower after the data was released with the Dow Jones Industrial Average DJIA, -0.40%  down 78 points in early trading and the S&P 500 index SPX, -0.32% down 3 points.